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Dive Brief:

Facebook has asked major U.S. banks, including JPMorgan Chase, Wells Fargo, Citigroup and U.S. Bancorp, to share financial information about customers, such as transactions and account balances, so that it could create new services for users on Messenger, The Wall Street Journal reported.

The social media network has said it wants to offer features that let users check their account balances and get fraud alerts, sources told the Journal. Facebook reportedly told banks that the information could be used to offer services that would encourage more time spent on Messenger, but said it wouldn't use the data to target ads or share it with third parties. One large bank, unnamed in the report, purportedly withdrew from the talks over privacy concerns.

A TechCrunch report suggested that the Journal exaggerated Facebook's plans for financial services and didn't explain how the social media platform already works with banks. A Facebook spokesperson mentioned in the report said that Facebook is not working on building a banking feature or to use the banking information to target ads.

Dive Insight:

While the exact nature of the reported deeper relationship between banks and Facebook is not clear at the moment, what is apparent is that the social media giant's actions are being closely scrutinized as they relate to the use of consumer data in the wake of the Cambridge Analytica scandal. If the Journal's report is correct that one bank withdrew from the discussions with Facebook over privacy concerns, the implication is that the social media company has a trust issue that could impact its ability to innovate. There are already indications that consumers have lost faith in Facebook and don't view it as innovative as they once did. If potential third-party partners start backing away from the company over data privacy concerns, this would inhibit Facebook's ability to offer new value-add services.

Banks are looking for ways to build relationships with social media platforms that have large volumes of users and often drive e-commerce purchases, in an effort to reach more consumers and grow their mobile payment user base. But, many financial services companies are reluctant to relinquish control to outside platforms. Instead, they prefer to keep consumers on their websites and apps, according to the Journal.

By expanding its partnerships with banks, Facebook could increase the usage of its Messenger platform by giving consumers convenient access to their financial information and deepening its relationship with users. Messenger's more than 1.3 billion users most often use the platform as a communication channel, according to a Greenberg survey cited by Adweek.

Facebook added video ads to Messenger in June that autoplay when mobile users scroll through the inbox section, the latest by the platform attempt to attract large advertisers who are shifting their marketing budgets to mobile video. The social media network has also unveiled several new features aimed at improving user experience and privacy. In June, Facebook said it would begin requiring advertisers to be more transparent about whether data brokers provided the information that led to the users being targeted with an ad.